USDCAD Overnight Range 1.2761-1.2838              

The US dollar ceded more ground overnight following Janet Yellen’s upbeat but non-committal speech in Philadelphia. She wasn’t all that phased with Friday’s nonfarm payrolls report, either saying “Although this recent labour market report was, on balance, concerning, let me emphasise that one should never attach too much significance to any single monthly report. Other timely indicators from the labour market have been more positive”.  Nevertheless, a June rate hike appears to be off the table and the odds for a July move, greatly reduced.  September, anyone?

US equities rose on the news while the US dollar declined.

That was the theme in Asia, as well. The Reserve Bank of Australia left rates unchanged at 1.75% and then released a statement that omitted an easing bias. That was a surprise to many analysts and the currency rallied.  AUDUSD jumped to 0.7453 from 0.7363, prior to the news.  USDJPY moved higher while the Nikkei rose. Sterling had a rather volatile Asia trading session screaming higher and then collapsing, all within a few minutes without an identifiable catalyst.

In Europe, GBPUSD strength continued rising to 1.4608 from 1.4496 due to ever-shifting Brexit polls and profit taking.  Eurozone GDP data was a tad better than expected (Actual 1.7 vs. forecast 1.5%) but the news a zero impact on EURUSD which stayed within a 1.1340-1.1380 range.

The sinking US dollar gave oil prices a lift.  Crude was already rising on the perception that supplies were dwindling in part due to the Nigerian disruptions (while conveniently ignoring reports that Iran’s exports are rapidly increasing) and the weak US dollar vs. the majors was an added bonus. WTI cracked $50.00/barrel in early New York trading and touched $50.33

USDCAD has accelerated lower smashing through support levels like a hot-knife through butter. Support at 1.2900 gave way yesterday and support at 1.2800 cratered by mid-morning in Europe. Expectations for a Fed on hold for longer and rising oil prices have given the Loonie wings, just like Red Bull.  USDCAD has been very quiet since New York opened but remains very close to the overnight low.

Today’s Ivey PMI report may add an element of two-way risk to USDCAD trading if it is weaker than expected

USDCAD technical outlook

The USDCAD technicals are bearish.  The move below 1.2900 (38.2% Fibonacci retracement level of the May range) targets the 61.8% retracement level which is 1.2731. If that level breaks, the 2016 low of 1.2462 is the next stop.  A move above 1.2860 would negate the intraday downside pressure. For today, USDCAD support is at 1.2730, 1.2690 and 1.2660.  Resistance is at 1.2780 and 1.2840.

Today’s Range 1.2730-1.2830